For the week ending June 8, 2012, applications for home purchases and mortgage refinances increased 18 percent compared to the prior week, according to the Mortgage Applications Survey conducted by the Mortgage Bankers Association (MBA).
The volume of mortgage loan applications referred to as the Market Composite Index rose a seasonally adjusted 18 percent over the last week. The last time the index reached this high a level occurred more than three years ago in May 2009. The unadjusted Market Composite Index registered a 30 percent increase compared to the previous week.
The seasonally adjusted Purchase Index rose 13 percent compared to the previous week. The unadjusted Purchase Index increased by four percent to 23 percent over the prior week. The volume of homeowners seeking to refinance mortgages, as measured by the Refinance Index, increased a seasonally adjusted 19 percent from the prior week—its highest level since April 2009.
Highest Activity Level since Early 2009
The sharp increase in the quantity of mortgage applications was somewhat exaggerated because of the Memorial Day holiday the previous period. Nonetheless, Michael Fratantoni, MBA’s Vice President of Research and Economics said, “the level of refinance and total market activity is the highest since the spring of 2009.” The Home Affordable Refinance Program (HARP) made up about 28 percent of mortgage refinance applications, according to Mr. Fratantoni.
Overall, mortgage refinance activity increased from 78 to 79 percent of all applications. Adjustable-rate-mortgages (ARM) comprised five percent of total mortgage applications.
Average Loan Sizes and Interest Rates
The MBA reports, the size of loans for homebuyers averaged $243,733 in May compared to $238,135 for April. The average size of mortgage refinances increased from $219,664 in April to $226,576 in May. The Pacific region of the United States recorded the largest purchase loans and mortgage refinances with an average of $357,978 and $313,826, respectively.
Contract interest rates for the 30-year fixed rate mortgage for conforming loans averaged 3.88 percent compared to 3.87 percent the previous week. Points, which include the origination fee, decreased from 0.46 percent to 0.43 percent for 80 percent loan-to-value ratios (LTV).
On average, contract interest rates for 30-year fixed-rate loans for jumbo loan products declined to 4.12 percent after registering 4.13 the prior week. Points for jumbo loans with 80 percent LTVs increased from 0.35 percent to 0.41 percent, including the origination fee. Jumbo loans have balances greater than $417,000.
FHA-insured 30-year fixed-rate mortgages with 80 percent LTVs had an average contract interest rate of 3.71 percent compared to 3.70 percent the prior week. Points for this product, including the origination fee, decreased from 0.60 percent to 0.59 percent. The 15-year fixed-rate mortgage had an average contract interest rate of 3.23 percent, up from 3.20 percent the previous week, for loans with 80 percent loan-to-value ratios.
Borrowers who selected 5/1 ARMs received an average contract interest rate of 2.78 percent for loans with 80 percent LTVs and points of 0.48 percent versus 0.46 percent the previous week.